Everything You Need to Know About the Bureau of Public Enterprises (BPE)

Everything You Need to Know About the Bureau of Public Enterprises (BPE)

Bureau of Public Enterprises BPE

Established to address the challenges posed by public enterprises, the Bureau of Public Enterprises often known as BPE has played a critical role in privatization, commercialization, and the overall reform of crucial sectors of the Nigerian economy.

This article we would cover:  

  • The BPE’s history; 
  • its significant milestones and  
  • Its essential role in Nigerian Finance.  

What is BPE? 

The Bureau of Public Enterprises, or BPE, is an agency responsible for implementing the government’s privatization program. This program transfers ownership and control of certain government-owned businesses to private individuals or companies. 

The BPE serves as the secretariat of the National Council on Privatization (NCP) and is responsible for implementing the council’s policies on privatization and commercialization. 

The BPE has six departments under its command, namely: 

  1. Industries and Services Department
  2. Agriculture and Natural Resources Sector 
  3. Infrastructure and Public Private Partnership (I&PPP) Department 
  4. Transport Department 
  5. Post Transaction Management Department 
  6. Finance and General Services Department 

History of BPE 

BPE was first established in 1988 as the Technical Committee for Privatization and Commercialization (TCPC) in an attempt to initiate the government’s privatization efforts. 

 Later 1993, TCPC became BPE, gaining a supervisory and technical board. While BPE inherited TCPC’s structure and staff, it remained part of the public service. 

 However, in 1999, BPE underwent another transformation, becoming an independent entity. It no longer had a board but reported directly to the National Council on Privatization (NCP), chaired by the Vice President of Nigeria.  

This means the Vice President is responsible for setting policies related to privatization and ensuring its effective implementation across the country, giving Him a central role in shaping privatization policy. He also streamlines decision-making within BPE and enhances accountability in the privatization process. 

Roadmap of the BPE

  • 1975 – 1995: The Federal Government invested over $100 billion in establishing Public Enterprises (PEs). 
  • 1983: Privatization and commercialization program introduced but not implemented. 
  • 1984: Study Group on PEs established. 
  • 1986-1987: Initial privatization activities take place. 
  • 1988: Public Enterprises Privatization and Commercialization Decree No. 25 enacted. 
  • 1989-1998: Initial privatization and commercialization activities continue. 
  • 1991: Survey identifies approximately 1,500 PEs in Nigeria. 
  • 1994-1998: Privatization program experiences a lull. 
  • 1999: Public Enterprises (Privatization and Commercialization) Act No. 38 of 1999 established the National Council on Privatization and BPE
  • 1999: The program is reinvigorated with a focus on critical sectors
  •  2000s

– Steering committees established for key sectors

– Various committees were set up to address cross-cutting issues, including pension reform, cross debts, and competition legislation

– Reform activities initiated in sectors like Oil and Gas, Telecommunications, Transport, Aviation, Electric Power, Agriculture, and more

Functions of BPE based on their departments

The core functions of the Bureau of Public Enterprises revolve around the privatization and commercialization of public enterprises.

 The list of the core duties for each department within the Bureau of Public Enterprises are:

1. Industries and Services Department

Reforming non-performing Public Enterprises (PEs) for optimal performance: This means making changes and improvements to government-owned businesses that are not doing well so that they can perform much better and be more successful. 

Privatization and commercialization programs in the communications and industries sectors: This involves selling or making private certain government-owned businesses in communication (like phone and internet companies) and various industries (like factories and manufacturing) to improve how they operate. 

Partial commercialization of government-owned media enterprises: Some government-owned media companies, like TV or radio stations, might not be entirely sold to private owners but could still operate more like private businesses to be more efficient and competitive. 

Restructuring and modernization of the postal sector mean changing how the postal (mail and package delivery) services are organized and bringing them up-to-date with modern technology and methods to make them work better. 

2. Agriculture and Natural Resources Sector

Partial commercialization of National Parks Services:  Some parts of the National Parks Services, which protect and manage natural areas, might be run more like businesses while still keeping their focus on conservation and tourism. 

Partial commercialization of River Basin Development Authorities (RBDAs): Some aspects of River Basin Development Authorities, which work on water resources and agriculture, might operate more like private businesses while still serving their public purposes. 

Concession of Abuja Water Board (AWB): This involves allowing a private company to operate and manage the water services in Abuja ( the capital city of Nigeria) under certain conditions and agreements. 

Sale of approved remaining Non-Core Assets of NCC. The government may sell certain assets that are outside the core functions of the Nigerian Coal Corporation (NCC), which deals with coal mining and related activities. These assets can include properties or equipment that are no longer needed for the primary operations of the NCC. 

3. Infrastructure and Public-Private Partnerships (I&PPP) Department

Developing PPP frameworks: This involves creating the guidelines, rules, and regulations governing how public-private partnerships (PPP) will be structured and managed. It outlines how government entities can collaborate with private companies on various projects. 

Assessing infrastructure status and performance:  Before entering into a PPP, it’s essential to evaluate the current condition and effectiveness of existing infrastructure, such as roads, bridges, or utilities. This assessment helps identify what needs improvement or development. 

Providing technical assistance for PPP projects:  The BPE may offer support and expertise to private partners involved in PPP projects. This assistance ensures that projects are well-planned, efficiently executed, and meet established standards. 

Analyzing PPP projects: In-depth analysis of proposed PPP projects is crucial. This involves evaluating the partnership’s potential risks, costs, benefits, and long-term sustainability. It helps make informed decisions about whether to proceed with a specific project. 

4. Transport Department

Reforming the Transport Sector: This involves making significant changes and improvements to the transportation industry. These reforms include updating regulations, modernizing infrastructure, and enhancing the efficiency and effectiveness of transportation services. 

Restructuring the Transport Sector: Restructuring means reorganizing how the transport sector operates. It might involve splitting or merging agencies, creating new departments, or changing the roles and responsibilities of different entities within the industry to make it more efficient and responsive to the needs of the public. 

Concessioning the transport sector: Concessioning means allowing private companies to take over the operation, maintenance, and development of specific parts of the transport sector, like airports, ports, or highways. These private companies typically pay a fee or share revenue with the government in exchange for the right to operate and profit from these assets. 

Introduction of Sector Regulators:  Sector regulators are independent bodies established by the government to oversee and regulate specific aspects of the transport sector, such as aviation, maritime, or road transportation. Their role is to ensure fair competition, safety, and compliance with industry standards while protecting the interests of consumers and stakeholders. 

5. Post Transaction Management Department

Monitoring and enforcing investors’ compliance with covenants: This involves keeping a close eye on the agreements (covenants) made between the government and the private investors during the privatization process. The goal is to ensure investors follow through on their promises and obligations. 

Assessing the impact of privatization: It covers evaluating and understanding how the privatization of a government-owned business has affected various aspects, such as the economy, employment, and service quality. It helps determine whether privatization has been beneficial or not. 

Conducting post-transaction studies: Post-transaction studies involve conducting research and analysis after the privatization of a business. These studies can provide valuable insights into the outcomes and consequences of the privatization process. 

Handling labor issues and post-acquisition plans: Labor issues refer to concerns related to the employees of the privatized business, such as their job security, wages, and working conditions. The BLE’s post-acquisition plans involve making arrangements for the business’s future operation, growth, and development under private ownership. 

Listing companies on the stock exchange: When a company is listed on the stock exchange, its shares (ownership portions) are available for public trading. By listing companies on the stock exchange, the BPE allows investors to buy and sell shares, which can help raise additional capital for the company and provide liquidity to shareholders. 

6. Finance and General Services Department

Overseeing general administration, HR development, IT services, and procurement activities: This involves managing various aspects of the organization, including administrative tasks, human resources (employees), information technology services, and procuring goods and services. 

Ensuring compliance with procurement regulations:  Procurement regulations are rules and guidelines that govern how an organization buys goods and services. Providing compliance means following these regulations to ensure that purchases are made transparently and fairly. 

Managing Finance and accounts: This entails handling the financial aspects of the organization, including budgeting, accounting, financial reporting, and financial planning. 

Obtaining necessary Council approvals: The organization may need approvals or permissions from its governing council or board before making significant decisions or taking essential actions. This step ensures that important decisions are made with proper authorization. 

Interfacing with key stakeholders: Key stakeholders are individuals or groups interested in the organization’s activities and outcomes. Interfacing means communicating and collaborating with these stakeholders to address their concerns and interests. 

Impact: What Small Businesses Need to Know 

The privatization program managed by the Bureau of Public Enterprises (BPE) has promoted competition, efficiency, transparency, and better management in various sectors, attracting foreign investment and creating job opportunities. 

This has led to a more favorable business environment for fintech companies, breaking monopolies, reducing inefficiencies, and improving competition, resulting in lower prices and better services.  

Additionally, the growth of the private sector, driven by privatization, has expanded capital markets, making it easier for businesses, including fintech startups, to access capital. 

However, there are challenges in ensuring that the necessary private sector investments are made, particularly in the transmission sector. Over the years, the BPE has acknowledged the need for government support to strengthen the transmission sector in Nigeria 

 As Benjamin Ezra Dikki, the Director General of the BPE, rightly notes, “One of the largest challenges in any privatization is ensuring that the private sector makes necessary investments.” He said, “We also will need to be sure that the government adequately supports the transmission sector through funding so that it can make the investments to be able to wheel the increased generation capacity.” 

This highlights that there is still work beyond initial privatization to ensure sustainable results, and the BPE is committed to providing guidance and support.

Famous Privation Programs by the BPE

 One of the significant roles of the BPE is the privatization of government assets.

Here is a list of the top 5 successful privatization deals the agency has done since its inception. 

1. Peugeot Automobile Nigeria Limited (PAN)

PAN, established through a joint venture between the Nigerian government and Peugeot of France, faced challenges over the years. While it initially had a high production capacity, economic downturns led to decreased production and sales. 

However, by introducing new Peugeot vehicle models in Nigeria, PAN adapted by modernizing its plant and improving technology. This move aimed to replace older models like the Peugeot 504 with newer, more advanced vehicles. PAN expanded its operations to include importing and distributing genuine motor spare parts. 

Despite the economic challenges, PAN continued to contribute to the Nigerian economy, mainly through sales to the public sector. (It operates through a network of distributors across the country, providing after-sales services and technical support.) 

 While PAN faced fluctuations in its financial performance, it remained a vital player in the Nigerian passenger car market. The company expressed prospects for growth, planning to import more completely built unit vehicles and potentially manufacture them in Nigeria. 

This highlights how the BPE helped establish PAN by establishing a partnership between the Nigerian government and Peugeot from France. BPE’s job in the privatization program and making changes in different sectors made it easier for PAN to start and run its business successfully. Essentially, BPE created the right conditions for PAN to operate and grow.

2. NITEL

The Bureau of Public Enterprises was crucial in transforming Nigeria Telecommunications Limited (NITEL). NITEL, the national telecommunications company, was owned by the Federal Government of Nigeria, but BPE facilitated a privatization plan for NITEL to bring in core investors and later conducted an Initial Public Offer (IPO) for minority shares. 

NITEL provides various telecommunications services, including fixed telephony, long-distance, cellular, and Internet. Despite having a leading position in the market with 720,000 fixed telephone lines, NITEL faced challenges due to increasing competition in fixed and mobile markets. 

The government’s reform efforts, supported by BPE, aimed to liberalize critical sectors, including telecommunications, to foster competition and improve efficiency. BPE successfully concluded transactions with foreign investors in other sectors, contributing to Nigeria’s macroeconomic stability. 

The telecom sector presented growth opportunities due to Nigeria’s demographic profile, with a young and urbanizing population. The introduction of a new telecommunications act in 2003 aimed to create a transparent and regulated environment for telecom operations, boosting investor confidence. 

BPE’s role in this process highlighted its contribution to privatization and sector reform, setting the stage for positive changes in Nigeria’s telecommunications landscape. 

3. Electric Power

BPE successfully oversaw the privatization of eleven distribution companies, responsible for the distribution of electricity nationwide. This initiative aimed to introduce private sector efficiency and investment into the electricity distribution system. 

Additionally, it led the privatization of seven generation companies, responsible for electricity generation in the country. This endeavor sought to revitalize power generation and diversify energy sources, with ongoing efforts, including the privatization of Afam Power Plc. And further played a crucial role in the reversal of Yola Distribution Company’s ownership to the Federal Government, primarily due to security challenges in the Northeastern region. BPE’s involvement ensured a smooth transition, safeguarding uninterrupted power supply in the area. 

In addition to these achievements, BPE engaged Manitoba Hydro International Nigeria Limited (MHINL) as a management contractor for the Transmission Company of Nigeria (TCN). This management contract was designed to enhance the efficiency and overall operations of the national transmission network. 

4. FAAN

BPE recognized the need for private sector involvement in airport management and initiated a privatization strategy, starting with the Nnamdi Azikiwe International Airport in Abuja. This move aimed to infuse private sector efficiency and investment into airports, ultimately enhancing services and infrastructure. 

It then oversaw 21 airports across Nigeria, positioning the country as a key player in the West African aviation network. BPE’s vision extended beyond runways and terminals to comprehensive airport facilities, fostering sector development. 

After acknowledging competition from road transport, BPE actively strategized to maintain the aviation sector’s growth and relevance by championing technological advancements and streamlining airport operations through modern systems. The BPE emphasized the revenue potential of airports, by recognizing the substantial market for airport services in Nigeria, and advocated for their development into multifunctional hubs, maximizing income streams. 

5. Port Harcourt Refining Company Limited

PHRC, located near Port Harcourt in Rivers State, houses two refineries with substantial crude oil processing capabilities. BPE has played a central role in transforming PHRC by separating it from the Nigerian National Petroleum Corporation (NNPC) and establishing it as an independent entity.  

However, historical operational challenges, such as inadequate maintenance and staffing, have hindered PHRC’s ability to realize its full potential. 

Despite these hurdles, BPE recognizes PHRC’s vast potential and crucial role in meeting Nigeria’s energy demands. With a refining capacity of 210,000 barrels daily, PHRC can satisfy petroleum product requirements in Nigeria and West Africa. BPE envisions PHRC operating at 90-95% capacity, capitalizing on favorable crude oil prices to generate profits quickly. 

BPE’s involvement encompasses a broader strategic vision aligned with Nigeria’s energy security and economic growth objectives. By nurturing PHRC’s transformation, BPE contributes to the nation’s journey toward energy self-sufficiency. 

Conclusion

As it continues to shape the nation’s economic future, BPE remains integral to Nigeria’s pursuit of sustainable development and prosperity. 

With its mission to promote healthy competition among businesses and provide more opportunities for Nigerians in the business world, it plays a vital role in Nigeria’s movement toward a thriving private sector and sustainable development.  

By reading this article, we believe you have comprehensively understood BPE’s pivotal role in Nigeria’s economy. 

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